Congestion Of Auto Components Imported From China May Lead To Production Delays

The Coronavirus situation has adversely disrupted the Indian auto industry. With an eroded supply chain, production has been dwindling and achieving sales targets has been a challenge. Moving forward things are expected to get even worse due to the delay of imported component clearances at Ports which eventually are expected to take a toll on manufacturing of CKD vehicles. All import consignments from China are being subjected to manual inspection resulting in inordinate delays in clearance.

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Delayed clearances at the ports especially for consignments from China will lead to delays in the manufacturing process

Showing concern over the matter, Rajan Wadhera, President- Society of Indian Automobile Manufacturers (SIAM) said, "Inordinate delays in clearance due to congestions at port could eventually impact manufacturing of vehicles in India. The industry is piecing itself together as growth is limping back; any further disruption at this juncture is best avoided."

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CKD models with higher localisation levels will be adversely impacted.

On similar lines Deepak Jain, President- Auto Component Manufacturers Association (ACMA) said, "The automotive value chain is a highly complex, integrated and interdependent one; non availability of even a single component can, in fact, lead to stoppage of the vehicle manufacturing lines. Post the lockdown, production in the component industry is gradually picking up in tandem with growth in vehicles sales, it is therefore in the best interest of the industry and the economy that any further disruptions are best avoided."

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The entire automotive value chain in the country is around USD 118 billion of which import of auto components is USD 4.75 billion, about 4 per cent of the total auto industry turnover. Some of the items imported from China are critical components such as parts of engines and electronics items which still cannot be sourced from local component manufacturers. It is understood that locally manufactured models of models with higher localisation levels can still sustain the situation, but CKD models with higher dependency on imported component especially in premium segments are likely to be impacted.